MADRID – Spanish pharmaceutical company Grifols (NASDAQ: GRFS) said on Tuesday it had written down its 2020-2023 financial records by 457 million euros ($494 million) to account for the value of its stake in Chinese company Shanghai RAAS.
Spain’s stock market regulator CNMV had earlier suspended trading in Grifols shares after Bloomberg first reported the revision, citing an unidentified source familiar with the matter, on the day Grifols was due to report earnings.
As trading resumed after Grifols released a statement on the writedown and posted a first-half profit, its shares were 0.2% down on the day.
“Despite this correction resulting in a reduction of equity by 457 million euros, it has had no impact on the income statement; it represents an incorrect accounting treatment without affecting the correct results for each affected financial year,” Grifols said.
Grifols (NASDAQ: GRFS) sold the 20% stake it had in Shanghai RAAS earlier this year to Haier Smart Home for $1.8 billion.
Grifols, which produces drugs made with blood plasma, had said it would use the proceeds to reduce its debt.
The company swung to a net profit of 36 million euros ($39 million) in the first half of 2024 from a year-ago loss of 70 million euros, on revenue of 3.4 billion, and reiterated its full-year guidance of revenue above 7 billion euros and adjusted core earnings or EBITDA above 1.8 billion euros.
Adjusted EBITDA rose 22% to 791 million euros in the first half, while Grifols’ leverage ratio fell to 5.5 times from 8.9 times at end-2023.
The company lost almost 40% of its market capitalization since early January when short-seller fund Gotham City Research issued a report questioning its accounting and debt levels. Grifols has dismissed the report, insisting its data were correct, and has sued Gotham City.
The short-sellers report prompted the company to change its auditor, review its corporate structure, and reshuffle its top management.
Earlier this month, the Grifols family said it had teamed up with Canadian fund Brookfield to evaluate a possible joint takeover bid for the company, now worth about 5.7 billion euros.
($1 = 0.9255 euros)
(Source: Reuters)
Maria Reed is a financial journalist with a passion for covering US equities. She joined the ABBO News team in June 2023. Maria holds an M.S. degree in International Economics and Finance from Otto-von-Guericke University in Magdeburg and is a CFA Level 2 candidate.
